Government finances are set to finish the financial year in a much healthier position than forecast, but there is no inclination to loosen the purse strings.
Prime Minister Jacinda Ardern and Finance Minister Grant Robertson. Photo: RNZ / Dom Thomas
Official figures show a strong tax take and slow growth in expenses has kept the budget deficit at $3.6 billion for the 11 months ended May, more than 40 percent lower than updated forecasts in the Budget.
Treasury said the strong economy, consumer spending, and labour market have delivered $4.1 billion of extra tax revenue, while government expenses were marginally lower than expected.
Finance Minister Grant Robertson called the numbers positive and repeated it confirmed the correctness of measures taken to counter Covid-19, but cautioned about the uncertain outlook.
"The recent case of an Australian traveller in Wellington with Covid-19, Australia's growing outbreak and the pandemic more globally shows the economic environment remains volatile.
"The recovery remains uneven among some sectors and regions in New Zealand, while supply chain issues still affect the economy," he said.
The level of net debt was also below forecast at 31.2 percent of the value of the economy.
The Treasury said the full-year accounts would be better than the Budget forecast of a $15.1b deficit.
Strong financial markets, increases in the value of investments, and reduced forecasts of future liabilities for government agencies such as the Super Fund and ACC, meant the government's overall finances were in surplus of $14.7b against a forecast of $6.1b.
"This government will continue to keep a lid on debt while targeting support to where it is needed most to accelerate the recovery and tackle long-standing issues around climate change, housing and child wellbeing," Robertson said.